Choice Hotels International, Inc. v. South Dakota Department of Revenue & Regulation

KONENKAMP, Justice.

[¶ 1.] South Dakota law exempts travel agent services from sales tax. Nonetheless, the Department of Revenue, reasoning that an entity acting as a pass through for tax-exempt funds was not itself specifically exempt from paying the tax, issued a certificate of assessment against a hotel franchisor for sales tax on travel agent commissions it collects from its franchisees and pays to travel agents. The Department also assessed the franchisor for unpaid sales tax on fees collected for its customer incentive program. As to the travel agent fees, we hold that no sales tax…